In your question you addressed two type of for sale properties:
1. Bank Owned
2. Foreclosure house that is not necessarily Bank owned.

Once a house is foreclosed it goes through Trusties sale at the court house door step. At that point the determining price is the loan amount that had foreclosed on the borrower (or loans, it could be that all first, second and more foreclose on a loan at the same time, This all depends if the borrower misses the payment on a loan three times and does not recover the delinquincies in 6 months) plus any leans recorded prior to recording of the Trustee sale. If the property does not sell at that point it becomes Bank Owned.

Then banks hire Real Estate professionals (i.e. Brokers and Agents) to provide them with BPO just as Kathleen explained in detail in the previous answer.
Banks could ask for BPO on a property from different agents to ensure they are getting the right information on the pricing.
Once BPO is done, banks could get (Would get) their own appraisers to get another evaluation of the property from Appraisal's point of view. Then they come up with a price based on the Fair market value provided by BPO and the appraisal and they would hire a Real Estate professional to list the property on MLS.

I hope this and the previous answer give you a good underestanding of how the pricing on a Bank owned property is determined.

Good luck with your search.

Once a bank owned property is assigned to be listed, a broker price opinion (BPO) is performed. This is similar to an appraisal however BPOs are typically performed by licensed agents at a much lower cost. BPOs factor many variables such as lot size, square footage, number of bedrooms, bathrooms, amenities and upgrades, etc. The subject property (bank-owned) is compared to recently sold homes, similar active listings and pending sales.

Experts are expected to look at the inventory (this is where tracking the statistics and knowing the market provides tremendous value) and determine fair market value. Fair market value is what a buyer may be willing to pay. Supply and Demand play a huge role. An overage of inventory on the market will drive prices down. A shortage of inventory will drive prices up with multiple offers and bidding wars.

Banks do look at their bottom line. In fact, that is all the banks look at. They want to get as much as possible for their asset. If a recommendation to make certain improvements will ultimately net the bank more money, the bank will generally authorize improvements. The bank looks at the “as is” and “as repaired” valuations on the BPO, If they can spend $5,000 to net $15,000 the banks will do it.

There is far more to purchasing a bank-owned home than most people realize. If you are looking to buy a home, make certain you are working with someone who knows what they are doing.

I hope you find this helpful.

Kathleen Daniels,
Broker Realtor
DRE 01366594

This is the same process as when you are ready to put an offer on a house. Your agent should show you what has sold in the immediate area with similar characteristics (age, sf, lot size). The loan is not taken into consideration.
Then it depends on what's happening in the area. We have seen a dramatic shift in the last few weeks that may not be reflected on the MLS. Again, your realtor should know the area and what has been happening to the transactions.
Let me know if I can help out with other foreclosure questions!
Joanna Bateman DRE 01792532
408.687.3626

Hi Cablekc,

in most cases, the bank as owner of the property, hire real estate agents who have shown an expertise in dealing with bank owned properites. The bank and the agent take a look at the market and decide what repairs if any they should do, and at what price it should be sold at to get it off their books with the least amount of loss. So in most cases the amount owed has little to do with the sale price. Good Luck

The List price of a Bank owned property (REO) is based on the Fair Market Value at the time a Realtor gets the listing. That simple. It has nothing to do with the past history of a loan.

Usually REO (bank owned) are not $750K. But their costs are more than what was owned by their last owner. Since they own the property they can try for whatever they can get. It is not difficult to find the record of foreclosure. I would ask a realtor to look into it for you. But a list price for bank owned is usually bottom in order to sell.